Victoria Atkins: Let me first thank all right hon. and hon. Members who have taken part in debates on the Finance Bill so far. Today is Report stage, but there has been intense scrutiny of many measures in the Bill, not just line by line in Committee on the Committee Corridor but, importantly, in Committee of the whole House. I hope that I will hear from right hon. and hon. Members on some of those discussions.
We are focusing on a number of proposed amendments to the Bill, which I will address in turn. Many of the Government’s amendments focus on ensuring the proper functioning of the legislation in response to scrutiny from businesses, business representative groups, parliamentarians and feedback. Others take forward responses to substantive issues that have emerged during the Bill’s passage. This is an exercise of how scrutiny in this place works, and I hope it works well. I will address each Government amendment in turn in this part of the debate. To reassure colleagues, I want to listen to the debates that will follow on non-Government amendments and proposed new clauses, and I hope to deal with points raised by right hon. and hon. Members when I wind up.
Government amendments 9 and 10 seek to ensure that our policy of full expensing achieves its intended affect. The existing wording can result in balancing charges being incorrectly calculated by not applying the correct apportionment to the disposal receipts. This is a straightforward and necessary technical adjustment to a policy that will help businesses to invest with confidence and boost UK productivity.
Government amendments 11, 12 and 13 provide that both the decarbonisation allowance and the existing investment allowance in the energy profits levy work as intended. They correct unintended exclusions by revising definitions to ensure that the investment allowances apply throughout the UK, in UK waters and on the United Kingdom continental shelf.
Government amendment 14 is a minor technical amendment that concerns the lifetime allowance—specifically, in clause 23, which allows modifications of certain existing transitional protections to ensure that stand-alone lump sums can continue to be paid to those who are entitled. The amendment clarifies the tax treatment for any amount above the limited 5 April maximum. The amendment is required to avoid an unintended outcome that would otherwise arise as a result of the removal of the lifetime allowance charge, whereby those who are entitled to stand-alone lump sums may not have been able to access their full benefit. The amendment corrects that. We are grateful to members of His Majesty’s Revenue and Customs pensions industry stakeholder forum for raising the issue.
New clause 4 relates to the domestic minimum top-up tax, which is part of the global minimum tax agreement. That agreement protects against large multinational groups and companies using aggressive tax planning and shifting their UK profits overseas. The amendment simply puts beyond doubt that the commencement date for the domestic top-up tax aligns with the multinational top-up tax and the internationally agreed timings, and  no earlier. The start date is for accounting periods beginning on or after 31 December 2023. We will discuss the global minimum tax agreement in more detail later, precisely because it is of particular interest to right hon. and hon. Members. I will respond to those further arguments and suggestions when I wind up.
Amendments 15 and 16 relate to the Bill’s provisions on alcohol duties and seek to ensure that alcoholic products produced overseas and imported into the UK are not excluded from the new draft relief or small producer relief. This is a technical amendment to ensure that the new reliefs apply equally to alcoholic products produced domestically and overseas and meet the originally intended policy aims. The amendments mean that the condition to be approved by HMRC applies to UK producers only.
Government amendment 17 on the electricity generator levy seeks to ensure that the provision works as intended and in accordance with the policy that the Government set out at the end of last year in its published technical notes in legislation. It will confirm that receipts of joint ventures attributed to their members are taxed whether or not the member is a generator, to ensure that those members are liable as intended. The amendment will ensure that the Government’s policy intention is clear in the specific provisions for joint venture members, and that the electricity generator levy collects the right amount of tax from the correct taxpayers.
Government amendments 18 and 19 intend to avoid any uncertainty for those planning new deposit return schemes, which introduces rules on accounting for VAT on deposits charged under statutory deposit return schemes. The amendment will put beyond doubt that VAT is due on unreturned drink deposits, removing any uncertainty for affected businesses.
New clause 5 makes technical changes to ensure HMRC’s civil information powers work as Parliament intended, to support its tax collection functions. The new clause will clarify the law to put beyond doubt that HMRC may continue to collect what is termed “communications data”, including essential information such as names, addresses and dates of birth from businesses and third parties. Following a recent change by the Home Office to its interpretation of communications data under the Investigatory Powers Act 2016, the clause will simply ensure that existing legislation continues to function exactly as Parliament originally intended, including the important safeguards already in place for the protection of citizens’ data.

Alun Cairns: I will speak to part 2 of the Bill, clauses 46 to 60, to which Government amendments 15 and 16 refer. In general, they relate to duty rates and any exemptions that apply thereafter. The Government’s objectives have been to simplify the system, to have an emphasis on health and healthy consumption, and, of course, to support pubs. In general, these are significant changes that have a positive impact on the hospitality sector.
When the Exchequer Secretary’s predecessor, my hon. Friend the Member for South Suffolk (James Cartlidge), said at the Dispatch Box that the Bill delivers the Brexit pub guarantee, there was significant enthusiasm within the sector to recognise and interpret a long-term commitment. There are two elements that immediately stem from that. The first is that these are changes that can be delivered as a result of Brexit; there were difficulties, challenges and nonsensical structures in the sector that could not be amended while we were a member of the EU. That is a major positive impact. However, the significance of the Brexit pub guarantee is that it will be long-term and we look for it to be ever extended.
I pay tribute to the Exchequer Secretary, who has engaged with me on some of the points that I have already made, but also to his predecessor, to the Chancellor, and to the Prime Minister when he was Chancellor, for recognising the opportunities to amend duty rates. That can genuinely help the hospitality sector, particularly pubs.
The original draft duty relief, which was in the Budget two years ago, was set to be 5% and to come into force this year. This year’s Budget and the Bill increased that to 9.1%, which will make a real difference. It follows the theme, all being well, of a continuing differential between rates that apply to the off-licence trade and those that apply to pubs and the general hospitality sector. The Government have therefore taken important, positive steps, which are welcomed far and wide.
We are trying to encourage people to consume alcohol in pubs more often than at home—clearly, there is an overhang from the covid pandemic—and to recognise the challenges that publicans, pub companies and brewers have faced in recent years. In the year to April, 4,600 pubs  closed. That demonstrates the challenge that publicans and pub companies face. The Bill shows the importance that we as parliamentarians place on having the pub in the community, where people can consume alcohol in a safe space, and anyone who drinks to excess is monitored and encouraged to do otherwise by the publican, friends and other hostelry customers.
The pub sector is hugely innovative. Pubs employ people flexibly and offer great opportunities to young people. I know that they are keen to work with the Department for Education, the Treasury and the Department for Work and Pensions. A meeting is coming up between the pub sector and the Department for Work and Pensions to ascertain how the apprenticeship levy can be used to reach people who are currently far away from the employment market. Pubs can offer flexibility, which can help bring those people back into the labour market.
My specific comments will relate to alcohol that is served on the premises, but is consumed off the premises. The common phrase that the industry uses is “decanting.” That gives rise to a new complexity, to which clause 52 refers. I recognise that one of the motives for changing the duty rates was to simplify the structures. The historical structures were hugely complex, expensive to administer and expensive for HMRC to interpret and collect. However, I cannot understand why, in simplifying the procedure, we are introducing a different tax rate for people who are served on the premises and consume at home.
Let me explain the market, because the first stage is to understand the marketplace. We are talking about a tiny proportion of the market—comprising possibly 0.1% of alcohol that is served on the premises. The market encompasses ale enthusiasts who take one or two pints home at the end of the day. Perhaps some people do not want to stay in the pub late and are happy to consume those one or two pints at home. Those ale enthusiasts usually take them in specially designed decanters to maintain the freshness of the beer. Another environment would be a tap room in specialist consuming environments such as a brewery, where people go to taste the different ales on offer.
The Bill proposes to apply the higher duty to those who are served alcohol on the premises and consume it at home. There are significant challenges in collecting that duty and in monitoring which pint has been served in a takeaway canister and which has been consumed on the premises. Some canisters hold two pints. A consumer may well drink one pint on the premises and take the second pint home to drink when watching the football on Sky. I am not sure which rate will apply in such a case and how we would prove whether the pint had been drunk on or off the premises.
I know that my remarks sound a bit facetious, but I do not mean them to be. I want to give full credit to the Exchequer Secretary, who has engaged and explained the reason for the difference in duty. It is to stop large outlets such as supermarkets choosing to serve alcohol on the premises and thereby benefiting from the lower duty. I recognise that that is a risk. Smaller shops such as corner shops could also try to apply for a licence to serve alcohol on the premises. That would change the nature of consuming alcohol. We like pubs because people can drink on the premises in the safe and healthy environment that I described.
Collecting the extra duty will be complicated. It will be onerous for the publican to monitor which pints have been served for takeaway. As I said, some may be drunk on the premises and some drunk off the premises. I repeat that that will apply to only 0.1% of the beer that is served on the premises. Although I recognise the serious risks that the Exchequer Secretary highlighted to me, I cannot accept that it is beyond the wit of the Treasury and the industry to devise a solution. I ask the Exchequer Secretary to re-engage with the industry to ascertain whether there is a much easier solution so that we can table specific provisions in future Bills to overcome the challenges.
The draft duty relief provision has already had a technical error. It was originally targeted at containers that hold 40 litres or more, but those are rarely used in the industry. I understand that officials simply googled the size rather than engaging with the industry to come up with an ideal solution. Thankfully, the legislation has changed that to 20 litres, which is a workable size. The good news has continued through our placing a lower draft duty on alcohol served on the premises.
The Government have made a good move. They have responded to calls from the industry, be they from small brewers, large brewers, pub companies, freehouses or individual publicans. That is recognised far and wide as a major step forward. The relief has increased from 5% to 9.1%. It will make a real difference to saving pubs, keeping them open and fulfilling the Government’s agenda to encourage people to drink safely and to drink less alcohol in general. It will help keep the pub at the heart of the community.
I ask the Exchequer Secretary to look at the tiny element I have described because there is a risk of undermining the good work that has been done for just 0.1% of beer that is consumed by people who choose to have one pint at home after they leave the pub. I hope that he can come up with a clause that will meet the needs of the industry and avoid the real risks that he previously highlighted.

Victoria Atkins: That is a very interesting point. I hope the Chair will not mind my saying so, but when I gave evidence last week, quite rightly I was challenged about how we measure success. This is incredibly complex, as my right hon. Friend will appreciate. For example, with the corporation tax rises, we have introduced the tapering because we have the policy intent of trying to help businesses that are small or perhaps finding their feet, and we do not want to be charging them 25% corporation tax if they have not reached the levels of profit set out in the Bill. The metrics we will use are very much being considered. I am not in a position to commit to those metrics at the moment, but I promise I will come back to her when we have a settled package that we think will address not only the concerns of the Committee but the wider concerns beyond simplification, such as fairness and encouraging growth.
HMRC also reports annually in its reports on its objective to make it easy to get tax right. As I have just set out, we are actively considering how to develop a suite of metrics to measure progress on that. Precisely because we recognise the concerns and the thoughtful considerations of the Treasury Committee and others across the House, I was very pleased at being able to intervene on my hon. Friend the Member for West Worcestershire to commit today to reporting annually—that is, in each tax year—to the Committee to provide an overarching summary of the Government’s progress on the simplification. To be very clear, I intend that to start this tax year, because I take this very seriously and I very much hope that Committee members and others in the House will share my intentions in so doing. I therefore hope that my hon. Friend and Committee members will not feel the need to press their amendments and new clauses.
I turn now to the subject of the global minimum tax legislation, which is again a complicated area. If I may, Madam Deputy Speaker, with your munificence, I will just spend a little bit of time on it, precisely because I understand the concerns that my hon. Friends have and, indeed, the level of scrutiny they have quite rightly given it as the Bill has made its journey through the House. First and foremost, if I may—I am very keen to get this on the record, because I know that my right hon. Friend the Member for Witham (Priti Patel) will rightly expect such commitments on the record—before I make the commitments that the Chancellor has made in his letter, I will set out the background to pillar 2. Although my right hon. Friend the Member for Witham clearly has a great deal of knowledge about this area, it is fair to say that not everybody in Parliament will have the same understanding.
By way of an explainer, pillar 2 will ensure that large multinational groups with revenues of more than £750 million pay a minimum effective tax rate of 15% in every jurisdiction they operate in. It is designed to protect against the risk of harmful tax planning by multinational groups and to promote fair and open competition on tax policy. It is really to prevent those  large multinationals from shifting profit out of the UK to those parts of the world that charge far lower tax rates than us. This will help to ensure that profits generated here in the UK are taxed in the UK, and it will strengthen the UK’s international competitiveness through placing a floor on the low tax rates that have been available in some countries.
A lot of questions have been asked about implementation, and I shall go into detail on them in a moment, but if we do not implement these rules, the tax will still be collected, but by another jurisdiction. That is because pillar 2 is designed as an interlocking set of rules ensuring that low-taxed profits will be taxed even if the UK or other countries do not move ahead. This is why we are determined to introduce or implement pillar 2 from 31 December this year, along with other EU member states and with Australia, Canada, Japan and Switzerland, so that we are moving in lockstep with our international peers.
Before I answer some of the questions that my right hon. Friend the Member for Witham has rightly raised, let me put on record my sincere thanks to her, and to other colleagues and friends who signed her amendment—and to whom I have spoken over many months in the run-up to today—to scrutinise what this means for the United Kingdom and for businesses. I absolutely understand why they are asking the questions. As I said, this is Parliament at its best, and I am genuinely grateful to her for raising these questions. What is more, the Chancellor is grateful. My right hon. Friend wrote to the Chancellor, and I am pleased to inform the House that he replied to her in the following way, to ensure that we all understand and appreciate the levels of scrutiny that have taken place.
The Chancellor maintains that the Government are sadly not in a position to support the amendment, but we recognise the importance of these matters to hon. Friends and Members of the House. On that basis, the Chancellor and I are happy to provide an update on pillar 2 implementation as part of the forthcoming fiscal event in the autumn, and if necessary in the spring. That update will include the latest revenue forecast from the OBR—that is an important point—and a status update on international implementation, which is a point that hon. Members are focused on. It goes without saying—I hope my right hon. Friend and others know this—that the Chancellor and I stand ready and are happy to continue to discuss such issues with her and others, as we move towards implementation towards the end of the year.
Quite rightly, my right hon. Friend and others have posed questions, and I will try to answer some of them. I was asked about implementation, which I completely understand. The member states of the EU are committed to implementation, and the EU directive in place is legally binding. The directive allows small member states—defined as those with 12 or fewer parent entities, and, therefore, those that are much smaller than our economy—more time to introduce the rules. Those countries are very few, and are not in the same economic position as the United Kingdom. They will not get an advantage from delaying implementation, as the directive requires other EU member states to collect the tax instead.
I have also looked to countries such as Thailand, Singapore and Hong Kong. The UK has a large and mixed economy, where it is appropriate for us to take action to combat aggressive tax planning and support  measures that support competition. Australia, Japan and Canada, which are our peers by size and shape of economy, are also implementing that rule. Indeed, Japan’s 2023 tax reform Bill was enacted after passing Japanese procedures in March. It will be introducing the income inclusion rule from 1 April, four months after us next year.
On the States, I understand why the question is being posed, and my hon. Friend the Member for Amber Valley set out some of the history behind where America has got to. In 2017, the US introduced a minimum tax on the foreign income of its multinationals, and it has recently introduced a minimum tax on the domestic income of large groups, including foreign headed multinationals. The US already has in place rules that operate on a similar basis to pillar 2, and it has been one of the strongest advocates for developing a global standard. It has maintained its commitment to align its rules with the agreed pillar 2 template, but until that happens, the OECD inclusive framework members, including the US, have agreed how the US rules and pillar 2 rules should interact, to ensure that US multinationals are subject to the same standard as groups in other countries. That is an important context.
If it is not implemented in the UK, what does that mean? Again, the question posed is a fair one. Generally, the international top-up tax is applied at the top of the business, and at the level of the ultimate parent entity. If that jurisdiction has not implemented the rule, the taxing right passes down the ownership chain of the business, until there is an entity in a jurisdiction that has implemented the rule. This is why without UK rules, this tax—chargeable in the UK, if it did apply—would be payable to another jurisdiction unless and until we implement the rules.
I very much understand the concerns raised about sovereignty. We retain the sovereignty to set our corporation tax rate. It is still the lowest in the G7, and we can use important tax levers to boost investment, including the UK’s world-leading R&D credit and full expensing regimes announced in the Budget. We have also ensured that UK tax reliefs such as the refundable R&D credit will not be treated as depressing the effective tax rates of claimants. We have been able to achieve that because we have been at the forefront of discussions and negotiations on these rules.
On the point about how these rules are agreed, implemented and who holds who to account, the model rules were agreed by consensus requiring the agreement of each country and jurisdiction. It is then up to each country and jurisdiction to implement the rules. There is not a higher body than jurisdictions here to do so. I very much understand the concern about innovation and growth. We will remain free to use the corporation tax system to support innovation, business investment and regional growth through R&D tax credits, enhanced capital allowances and tax reliefs in investment zones. We must continue to work together with our partners to avoid a subsidy race that could distort trade or impact sectors.
In answering those questions, I hope I have addressed some of the issues that Members have raised in relation to pillar 2. I very much hope that my right hon. Friend the Member for Witham, having brought the scrutiny which would be expected from her, will feel able not to press her amendment to a vote.
On the lifetime allowance and the Opposition’s new clause 1 and amendments 1 and 6, the Opposition just do not seem to get it. This measure has been brought forward to help the NHS retain those doctors and consultants whom we are so desperate to have in our NHS looking after our constituents and helping to cut the backlogs, as the Prime Minister has set out as one of his five priorities. That is why we have introduced this policy. The hon. Member for Ealing North (James Murray) seems to think—and we have had this conversation many times before—we could have dreamt up a proposal dealing just with doctors in the same amount of time it took us to bring in this policy—two weeks. The fact is that this measure started having an impact on our doctors, our consultants, our chief constables and others this tax year, as hon. and right hon. Friends have set out. We want to make that change precisely because we believe that our NHS and public services deserve it, and that is why we are bringing that lifetime allowance forward.
Moving to the non-doms point, this is again a conversation we have had repeatedly with those on the Opposition Front Bench. The hon. Member for Ealing North asked about the £830 million and seemed to question it. I am sorry to break it to him, but that has been scorecarded by the Office for Budget Responsibility. It has certified it, costed it and said that it will bring in £830 million over the scorecard period.
My right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) raised important questions regarding alcohol duty. He welcomes the changes in the round, but as the chair of the all-party parliamentary beer group, it is understandable that he is asking whether the draft relief is designed to apply to off-trade pints as well as on-trade pints. I am afraid that it is not, because we want to support consumption of beer in pubs. It is one of many ways not only to support our local pubs, but also to secure opportunities arising out of our exit from the European Union. Only pints in pubs will be subject to this measure, not pints poured into takeaway containers. The industry body the Campaign for Real Ale has lobbied to ask that that could happen. We have looked at the idea carefully, as has the Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), but we have serious concerns that it would overcomplicate the draft relief. I hope to reassure my right hon. Friend and CAMRA that takeaway services can continue so long as the beer comes from a full-duty barrel. I am reminded that takeaway off-trade beer accounts for 0.1% of beer sales, but, when the Bill passes its Third Reading today, I am sure that we will all be raising a pint in celebration.
We touched briefly on the electricity generator levy, which is payable only on the portion of revenues that exceeds the long-run average for electricity prices. We have done that carefully to try to ensure that we achieve the Government’s wanted net zero ends while looking after customers. New clause 12 perhaps misunderstands how the EGL operates, so we urge colleagues to reject it. In relation to the energy profits levy, it is important to note that the Government expect it to raise just under £26 billion between 2022 and 2028, helping to fund the vital cost of living support that we have discussed.
In relation to air passenger duty and new clause 10, we have made changes to take advantage again of our post-EU freedoms and to support the United Kingdom. We want friends and family to be able to fly to see each other across the United Kingdom. I am not quite clear whether Labour understands that or is now against helping friends and family across the UK to reunite. I am sure that all will become about as clear as its £28 billion U-turn.
I turn to new clause 5. The right hon. Member for Dundee East (Stewart Hosie) asked why are we making this change on Report. It became apparent that a welcome clarification by the Home Office on how information is obtained for criminal investigations means that some data that is genuinely needed by His Majesty’s Revenue and Customs to check a person’s tax position is deemed as communications data. The clarification aims to secure that into law. We are trying to do it as quickly as possible, which is why it is in the Finance Bill.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) raised the duty to report on public health and the poverty effects of the Bill. We already publish data on people in both relative and absolute low-income households each year through the “Households below average income” publication. The Welfare Reform and Work Act 2016 also requires us to publish statistics on the percentage of children in relative and absolute low income, combined low income and material deprivation and persistent low income. I very much hope that she will welcome the £3,300 on average of help that we are securing for families across the United Kingdom in these difficult times.
To conclude—[Interruption.] I thought that the House might be interested in some of the details; apologies for that. The Bill contains a number of important measures that will support the UK economy, people and businesses. I therefore urge the House to reject the proposed non-Government amendments for the reasons that I detailed, and agree to the Government’s amendments and new clauses. In closing, I thank everybody involved for their contributions to our discussions not just today but in the months that have led up to this.
Question put and agreed to.
New clause 4 accordingly read a Second time, and added to the Bill.